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Companies should diversify portfolios

We are all agreed that diversification is one of the best options to grow Zambia’s economy.

The need to do so arises from the  fact that there are many more avenues we can explore other than depend on copper alone to bring the country the much-needed export earnings.

The abundant God-given resources Zambia has should be put to good use, that is, they should create wealth that will benefit the country’s citizens and lift the index on export earnings.

The current economic challenges have left a negative impact on most enterprises. A number of them are struggling to break even in the realm of a harsh economic environment.

But these challenges have propelled some companies to consider novel ways of keeping afloat while remaining relevant to their customers. At the same time, the novel ways are also earning them more customers.

We have in mind the Zambia Consolidated Copper Mines – Investment Holdings (ZCCM –IH), which is diversifying its operations from mining to agriculture.
In support of such initiatives, government is tailoring its policies towards growing the economy, and the business sector would do well to take advantage of these policies.

Agriculture is not like mining. While mining may offer huge returns, they may not last longer than the ones offered in agriculture.

We are taught, from our secondary school lessons that copper is a wasting asset. Once it leaves the soil, there is no replacing it until we get to a point when we do not have it anymore.

With this in mind, the need to find other options to sustain a livelihood becomes imperative.

We can argue that it is difficult to come up with a sustainable way of mining but this is not the case with farming. As long as we use sustainable methods of preserving land, it will remain usable by future generations.

In comparison to mining, farming is a lot cheaper because it demands less labour and the processes involved in arriving at the final product are less expensive.

We therefore commend the ZCCM–IH for looking at eucalyptus production as an option to its current economic activities.

ZCCM-IH chief executive officer Pious Kasolo says the project will be established in Muchinga Province. It is expected that from the project, ZCCM-IH will produce biomass, fuel, essential oils, fertiliser, among other things.

We want to believe that the establishment of the project means the setting up of a plantation which will host the plants from which the by-products will come.

By its nature, a plantation will provide jobs for the local people and so will other processes that will involve extraction of the by-products from the plants.

If handled well, the project offers positive prospects that will propel not only the economy of Muchinga Province but the country at large and contribute to the gross domestic product.

There are a number of enterprises that are struggling and we are sure they would do well to consider diversifying their portfolio, like the ZCCM-IH has done.

Sticking to the old way of doing business will plunge some of them into further financial woes to the extent that they fail to meet their obligations to suppliers and workers.

Banks are usually available to offer capital for projects and we urge some of these companies to move in this direction. We are convinced the agricultural sector offers a better alternative for the survival of any enterprise.

There are also some new-comer enterprises on the market which are involved in a diversified range of economic activities and their balance sheet is showing positive results.

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